BAT strives to standardize its e-cigs across its network

Last Thursday, British American Tobacco (BAT), announced major changes in its management structure, in order to incorporate vaping products in its core business.

Diane Caruana

September 4, 2017

“Now that we have built a successful NGP (next generation products) business which is poised for substantial growth, we will be fully integrating NGP to leverage the scale and expertise of the whole group to drive growth in an area that is fast becoming a key part of our mainstream business,” said BAT.

BAT and Philip Morris (PMI), the biggest tobacco companies in the world, were the first to invest in electronic devices a few years back. In fact last year PMI made headlines when Andre Calantzopoulos, the company’s CEO said that he would like “to work with governments towards the “phase-out” of conventional cigarettes”. Additionally Peter Nixon, the Managing Director for UK and Ireland had said, “We want to move towards a smoke-free future and a lot of that is incentivising people to move across from cigarettes to something that is less harmful.”

Naturally, many are sceptical that the aim of such statements is ensuring the visibility of Philip Morris’ harm reduction product, iQOS. However the big tobacco company persists in pointing out that it really wants to stop selling cigarettes and turn the business into a sustainable one. ‘We are absolutely serious – one day we want to stop selling cigarettes,’ said Peter Nixon.

“We want to move towards a smoke-free future and a lot of that is incentivising people to move across from cigarettes to something that is less harmful.” Peter Nixon, Managing Director for UK and Ireland, Philip Morris Int.

Hence it comes as no surprise that BAT being PMI’s direct competitor, is also making it a point that they want to increase their focus on harm reduction products, in fact the tobacco company said that it wants to double the number of countries where it sells the products both in 2017 and in 2018.

Under the management reorganization that was announced last Thursday, BAT appointed Jack Bowles as chief operating officer for the international business, excluding the United States, and following the announcement shares went up by 1.5%.

Securing a solid future

These changes will certainly bring about some uncertainty for the company in the near future, but in the long term they will be of tremendous benefit as cigarette sales are declining globally.

Analyst for Jefferies, Owen Bennett, said these changes will certainly bring about some uncertainty for the company in the near future, but in the long term they will be of tremendous benefit as cigarette sales are declining globally.

“Whereas those companies that were better positioned for emerging market growth in the past were favoured, the key differentiator now is likely to be who is positioned best in emerging products, given the recent slowdown in emerging market cigarettes,” said Bennett.

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